![]() ![]() Unadjusted trial balance is a summary report of all the accounts in which journal entries are posted and contains the balances of these accounts. According to relevant needs and requirements of each entity, periodical reporting is done such as monthly reporting, quarterly reporting, semi-annual reporting and annual reporting. However, the next steps of accounting cycle are related to preparation of financial statements. The first two steps of accounting cycle are done on daily basis as and when financial transactions occur. Rules of debits and credits are followed while recording journal entries and posting them into relevant ledger accounts. Posting journal entries to relevant ledger accountsĪfter recording journal entries in the general ledger, these entries are posted into relevant ledger accounts or T-accounts. Usually at the time of recording the journal entries, accountants also get some supporting documents such as invoices, agreements and other source documents and maintain this record for transparency and internal control purposes. This is particularly important as only after completely understanding the business transactions, relevant ledger accounts are identified, and journal entries are recorded. Some business transactions are simple, but some are complex and require greater attention to understand them. This is the first step of accounting cycle which involves identification, understanding, evaluation and recording of financial transactions through journal entries. Recording financial transactions through journal entries Let’s briefly go through each step of accounting cycle. Closing books of account for an accounting period.Determining and recording adjusting entries.Posting journal entries to relevant ledger accounts.Recording financial transactions through journal entries.Accounting cycle generally includes the following steps: Accounting cycle is a comprehensive process of accounting starting from identifying and recording the financial transactions and ending at preparation of financial statements and closure of books of account of an entity for an accounting period. ![]()
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